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The head of the National Audit Office Sir John Bourn reported today on the Cambridge-MIT Institute (CMI). His report acknowledges the considerable potential and early success of CMI and identifies important lessons for departments on setting up and managing innovative ventures in the future.

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CMI, a company jointly owned by Cambridge University and the Massachusetts Institute of Technology, was established in June 2000 to enhance the competitiveness, productivity and entrepreneurship of the UK economy. Government grants to CMI will total £65.1 million over six-years, and £27 million had been spent by November 2003.

The NAO report recognises that CMI is an experimental initiative and its outcomes cannot be confidently predicted. The report sets out the following findings and issues for departments to consider when assessing and managing innovative projects.

  • Standard appraisal procedures should be applied or adapted for use and appropriate levels of control and risk management defined. For CMI, the Treasury decided on a two-stage process whereby it handled the negotiations up to announcing a funding commitment, subject to the Department of Trade and Industry agreeing details at a second stage. Given the difficulty of applying standard financial and economic appraisal in the early negotiation of such an innovative proposal, it was appropriate that the Treasury did not follow the usual arrangements, but the NAO would have expected to see some evidence that elements of the standard appraisal process were considered.
  • It is important to involve key experts from other relevant departments at an early stage, where possible, without risk to the project. The Department of Trade and Industry expertise was used effectively in the second-stage detailed design and financial negotiations for the project. The Treasury could have used this expertise earlier in the process, but judged that this would have risked securing the project for the UK. The Department would have benefited from becoming familiar with the project in the first stage, before taking responsibility for the second-stage negotiations.
  • Sufficient time and resources need to be given in order to establish a satisfactory infrastructure. A complex initiative like CMI requires time to set up, and there is a need to guard against ambitious expectations that results can start being delivered more or less straight away.
  • We believe that indicative objectives and measures (that should be genuinely indicative and not set in stone) would support effective monitoring by helping to build a reliable picture of progress.
  • Direct, personal monitoring can bring a range of benefits in the early days of an initiative that breaks new ground. As illustrated by the Department’s early work with CMI, close monitoring can help build positive relationships and support year-on-year improvements in how an innovative initiative is managed.

The nature of CMI’s projects (over sixty projects are ongoing or completed) means that many of its impacts will not be known for some time – but there is potential for considerable success. For example, its “silent” aircraft project has brought together organisations from the civil aerospace and aviation industry (including British Airways, Rolls-Royce plc, the Civil Aviation Authority and National Air Traffic Services) to work with Cambridge University and MIT to discover ways to develop a new generation of commercial aircraft that could be virtually noiseless. CMI is experimenting with different ways to facilitate innovation and entrepreneurship – from collaborations between academics and industry to lessons in entrepreneurship for students – to identify what works best.

"CMI has the potential to generate considerable impacts. Many of these will be long-term and are intrinsically difficult to measure. After a challenging start, I am pleased that CMI and the Department of Trade and Industry have been taking steps designed to maximise long-term success. Public sector organisations are increasingly expected to manage innovation, and we look to them to learn from the experience of CMI to improve their appraisal and management of innovative projects."

Sir John Bourn


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